LA Spurns Ontario’s Administrative Claim For Ontario International Airport

(May 31) The city of Los Angeles last week rejected a claim by the city of Ontario that Ontario International Airport has been mismanaged while under the stewardship of the larger city and that the aerodrome should be returned to the custody and management of an agency Ontario and the county of San Bernardino created last year to assume operation of the airport. .
In April, the Washington, D.C.-based law firm of Sheppard Mullen Richter & Hampton, on Ontario’s behalf filed an administrative claim, considered to be the precursor of a lawsuit, against the city of Los Angeles and Los Angeles World Airports, charging them with chronic mismanagement of the airport.  That claim sought to dissolve a 46-year-long joint powers operating agreement between the two cities for the management of the airport.
In 1967 Ontario and Los Angeles entered into that joint powers agreement to allow Los Angeles to use its clout with airlines to increase flights into and out of Ontario International, which at that time was servicing fewer than 200,000 passengers per year. Under Los Angeles’ guidance, the airport grew, more airlines began flying out of the facility and improvements were made to its runways and terminals. In 1985, after all of the conditions set down in the 1967 joint powers agreement had been met, Ontario deeded the airport to Los Angeles for no consideration.
Maintaining that in recent years Los Angeles World Airports, the agency that manages Ontario International, Los Angeles International and Van Nuys airports for the city of Los Angeles, has stifled Ontario International in a deliberate effort to benefit Los Angeles International, the city of  Ontario  has undertaken an aggressive campaign to force Los Angeles to redeed the airport back to Ontario. Ontario officials publicly insisted that LA should relinquish the airport for no consideration because the airport is considered a public benefit property which has no sale value. Privately, however, Ontario has offered Los Angeles $246 million for the airport as Los Angeles has sought potential private and public buyers for the aerodrome at reported prices ranging from $225 million to $650 million. In the sometimes acrimonious back-and-forth between the two cities, Los Angeles revealed the existence of Ontario’s offer, to both the chagrin and embarrassment of Ontario officials. Last year, Ontario, with the county of San Bernardino, formed the Ontario International Airport Authority, an entity intended to take over ownership and operation of the airport once Los Angeles relinquishes it.
The claim filed on Ontario’s behalf by Sheppard Mullen Richter & Hampton was intended as a crucial step in the effort to wrest the airport back. In that administrative claim, Ontario castigated Los Angeles and Los Angeles World Airports as responsible for  the reduction of passenger traffic through the airport since 2007, when 7.2 million passengers enplaned there. The decline of passengers to 4.2 million last year, according to the claim, is a direct result of the Los Angeles World Airports’ favoritism toward Los Angeles International, where extensive facility improvements have been ongoing for the last seven years and where passenger traffic has been on the upswing.
If Ontario officials had hoped Los Angeles would make a substantive response to that claim, they were disappointed. In a terse, seventeen word sentence, the city of Los Angeles rejected the claim, giving no grounds for doing so. That puts the ball into Ontario’s court, and city officials have six months to respond with a lawsuit based upon the issues outlined in the claim.
This is not the first time Los Angeles has rejected an airport takeover overture from Ontario. Last October, the Los Angeles City Council voted 12-0 to decline the $246 million bid Ontario submitted in December 2011.
The lawsuit set up by the administrative claim would likely seek the dissolution of the 1967 joint powers agreement relating to the airport between the two cities, a tall order given the city of Ontario’s 1985 action in deeding the airport to Los Angeles, which included a finding that Los Angeles had lived up to its end of the original agreement. The matter is complicated by Los Angeles having rerouted over the years scores of millions of dollars in passenger fees collected at Los Angeles International Airport to improvements at Ontario International. Moreover, the city of Los Angeles is in discussions with several private sector entities possessing airport management credentials, both foreign and domestic, with regard to a sale of Ontario Airport.
Earlier this week, the president of the Los Angeles’ Board of Airport Commissioners, Michael Lawson, firmly stated “There is no sound, legal or factual basis for this claim.”
Lawson and other Los Angeles World Airports officials referenced a recent report done by researchers at the Massachusetts Institute of Technology which found that there has been a steady decline in passenger traffic at midsize airports all around the country and that market forces are driving the declines.

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